Regulatory Alerts2021-12-21 | NBB_2021_24Added · Updated
Communication NBB_2021_24 / Evaluation of technical provisions for individual health insurance
The National Bank of Belgium establishes a reference scenario for individual health insurers to evaluate the prudence of medical inflation modelling assumptions used in calculating technical provisions under Solvency II. The scenario mandates a short-term approach combining European inflation swaps with a specific Belgian wedge, and a long-term Ultimate Forward Medical Inflation Rate (UFMIR) of 3.5%, derived from real GDP growth and the ECB's 2% inflation target. Insurers must apply the Smith-Wilson extrapolation method from a 20-year liquid point to a 60-year horizon and verify annually that any deviations from this reference do not result in an underestimation of technical provisions. This communication applies for the first time to figures at the reference date of 31 December 2021.